(Sept 9): Companies are ramping up borrowing in bond markets again after raising more than US$70 billion (RM284.84 billion) Tuesday in the busiest global session since June, as borrowers seek to lock in funding before costs climb any higher.
There are at least five companies from Asia, including Japan Post Insurance Co and Vedanta Resources Ltd, seeking to price dollar debt Wednesday, according to people familiar with the matter. Amazon.com Inc kicked off its sale of debut sterling bonds, as hyperscalers continue to turn to debt markets to fund AI bets.
US-Iran hostilities have fuelled inflation and investors are trying to gauge if the Federal Reserve will hike interest rates later this month, giving companies plenty of reasons to come to the bond market early. Issuers that priced debt on Tuesday were able to do so at a minimal extra spread to outstanding debt and attracted robust demand, according to data compiled by Bloomberg.
“With new issuance being well-absorbed and corporate fundamentals still robust, the key risks for global credit markets are geopolitics and inflation,” said Mark Reade, head of credit strategy at Mizuho Securities Asia.
A flare-up in the Middle East conflict and rising oil prices sapped some of the enthusiasm on Tuesday, with issuance in the US high-grade market the lowest in three years for the first day after the Labour Day holiday.
An expected announcement Wednesday on the size of the US Treasury’s next buyback of outstanding 10-year to 20-year securities is another potential flash point. The announcement has taken on increased significance after Treasury Secretary Scott Bessent said last month such repurchases would “at least double” in a bid to tame rising long-end borrowing costs.
Investor demand in the US high-grade market was about four times the amount of bonds sold Tuesday, according to data compiled by Bloomberg.
“Spreads are stable and order books are surprisingly large” for deals this week, said Owen Gallimore, Asia Pacific head of credit analysis at Deutsche Bank. “Credit markets are showing amazing resilience” given movements in oil prices and government bonds, he added.
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